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Monday, 14 September 2015

The AmeriKat is not coming out until after the transitionalperiod of the UPC - hello 7-14 year nap!

With the new court term looming, last week IPSoc, the society for junior IP practitioners, hosted its final educational event of 2015, "The UPC: A Panel Debate". For those readers unfamiliar with the society, IPSoc is an intellectual property society run by juniors, for juniors (and for a nominal annual fee). The organization arranges four educational events, four social events and one fancy annual dinner each year for its members (which the AmeriKat was lucky to attend a couple of years ago).

Held at the offices of Bristows, the panel featured UPC-gurus Alan Johnson (Bristows) alongside Tim Frain (Nokia). Sadly, the AmeriKat was immersed in post-trial detritus at the time, so had to rely on the chair of the session, Nick Buckland (Irwin Mitchell), to tell all. Over to Nick:

"Developments on the UPC have been gathering pace; eight of the thirteen required states have ratified, judges training is under way and the London local/central division has a shiny new home (see earlier AmeriKat post here). But there are still some controversies surrounding forum shopping, transitional periods and whether users will be sufficiently incentivised to opt in (strictly "not-opt-out"). These were just some of the many issues under discussion.

The evening started with a reminder of the speakers’ long association with the UPC project. Alan has been involved with the UPC since 1999, when a meeting in Brussels resulted in him having an early chance to observe the project's development. Tim has been involved representing the interests of industry since the current manifestation of the UPC was proposed in 2007, but was quick to ask that the audience didn’t blame him for any shortcomings with the system. This was because during the early stages of the process industry was told that it was too early to comment on the draft proposals, then shortly afterwards they were told it was too late. Various proposals were put forward by industry and other stakeholders but the draftsmen in Brussels did not always take heed of the comments made.

When asked what his ‘hopes and expectations’ were for the UPC when he first became involved with the project, Tim explained that industry wanted significant improvements over the current system as opposed to a politically expedient solution. Tim himself had certain ‘key asks’; his list included high-quality judges, minimum forum shopping and cost competitiveness. He planned to tick these off as these issues were resolved but found that, having revisited his list recently, ticks were few and far between.

The AmeriKat tried to forum-shopin the UPC, but she couldn't reach the shelves...

The panel agreed that the issue of unitary patent fees had proved politically divisive and was still a major potential stumbling block to success. There was concern for how SMEs would fare under the system; Alan felt that "all or nothing" renewal with no potential for pruning meant that, unless a business was sure they wanted pan-European protection, many would still be incentivised to go down the national validation route in a few ‘key’ states. Endorsement of the ‘true top 4’ principle was useful, but uncertainty over the distribution key meant that there was still a cloud over fees which could further delay or potentially derail the whole agreement – the same issue was one of two factors causing the deal on the table in 2003 to fail.

The talk then moved onto opt-out and the sunrise period; what could/should/would patent-holders do during the opt-out period? Tim admitted that even Nokia had found it difficult to come to a decision regarding opt-out, and that companies would need to review their whole portfolio in order to decide whether certain patents should be opted-out. Alan explained that large companies such as Philips have been quite overt in confirming they are "opting-in" the entirety of their portfolios, and when asked whether he advised that for simplicity, bigger companies just opt-out, he emphasised that whilst it would be preferable to assess each patent family on its merits, it may be simplest to go all one way or the other with a large portfolio. However with the opt-out still standing at €80 per patent family it could prove hugely costly to opt-out entire portfolios for some companies.

A question was raised regarding how SMEs, who the system is catered for, would even know about the system. It’s not often that Alan Johnson is stumped by a UPC question but his answer was that he really didn’t know at the moment. He commented that getting customers in the door of the UPC was the bigger issue which remained to be solved, although he noted that in the UK the Intellectual Property Office was making efforts.

The panel were then asked about the selection and training of judges, which led to Alan to admit this issue was the one which was "most likely to delay the whole process". Judicial salaries are a major issue and high standards of judicial decision-making is crucial. Some of the training material Alan has seen had been remarkably basic: paragraph 1.1.1 was "what is a patent?

On forum shopping, the panel agreed that there was a risk of a ‘race to the bottom’ for patentee-friendly jurisdictions, and there will be plenty of CJEU referrals during the first few years of the system on forum shopping issues: the idea that a patentee threatening UPC proceedings could be met by a national revocation action or DNI was faintly absurd. There was also confirmation that almost all patent attorneys will have rights of audience before UPC courts (of which see Katpost here).

UPC talks have been the staple of many a Kat’s diet for a while now – but IPSoc strives to make its educational events that little bit different, and the informal and flexible nature of this talk (illustrated by the boy band-style chairs the presenters had the pleasure to be sat on) helped to make this UPC session more interesting for those who will actually inherit the UPC legacy - junior IP lawyers.

For more information on IPSoc and instructions on how to join visit www.ipsoc.org."

When one reads that the system is catered for SMEs, one wonders if it a just a joke or meant seriously. What worries the SMEs is not so much the level of fees, and the discount they expect is not what will persuade them to use the system, or any patent system at all. What worries the SMEs is the high costs in case of litigation. It is not that they will attack first, but they fear attacks from large multinational companies. Rather than give them a fee reduction, it would be wiser to help them in case of litigation.When one realises that the number of EP patents originating in Europe has gone down from 50% in 2011 to 35% in 2014 (official EPO figures) one should not be surprised by the fears voiced by SMEs. From those 35% how many emanate from SMEs?Is this a reality which has been thought by the politicians? Or has the lobbying from industry and some firms of representatives been successful?

I agree entirely. I recall attending one of the old Patent Office Road Shows in the 1990's where one of the attendees said that when he had notified a large company of the existence of his patent in respect of something they were making, their reply said that they had investigated his company and calculated that he could not afford to sue them. This was indeed the case, so he made the best of a bad job by selling his patent to their main rival. The road show presenters said that they were aware of this sort of problem, but could offer no immediate solution.

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